A Regional Solution for a Transnational Problem? - A Mechanism to Unilaterally Tax Maritime Emissions While Satisfying Extraterritoriality, Tax Competition and Political Constraints

Rotterdam Institute of Law and Economics (RILE) Working Paper Series No. 2014/06

70 Pages Posted: 23 Oct 2014 Last revised: 14 Nov 2017

See all articles by Dirk Heine

Dirk Heine

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics; University of Hamburg - Institute of Law and Economics; University of Bologna - Department of Economics; World Bank, Macroeconomics, Trade and Investment Global Practice

Susanne Gäde

University of Duisburg-Essen - Department of Economics and Business Administration

Goran Dominioni

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics; University of Bologna - Department of Economics; University of Hamburg - Institute of Law and Economics; Yale Law School

Beatriz Martinez Romera

University of Copenhagen - Faculty of Law

Arne Pieters

University of Hamburg - Department of Economics

Date Written: August 13, 2015

Abstract

Among academics and policymakers, it is generally agreed that implicit tax subsidies for maritime fuels — which are currently granted around the world — are inefficient, but that their abolishment requires a unanimous international agreement. Such an agreement is deemed indispensable because any unilateral action would be impossible due to massive tax competition in this industry, competitiveness effects and the legal limits on regulating an industry operating mostly in international waters, thus outside of any state’s jurisdiction. However, an international agreement to solve these problems has proven impossible to reach, thus resulting in the conservation of the status quo. To break this deadlock, we propose a mechanism whereby a small coalition of countries, to start with, can abolish these implicit tax subsidies even in the absence of an international agreement. The effects of acting without a world-wide agreement are analyzed from an economic perspective, taking into account the current legal framework. The coalition considered in this article focuses on EU member states, although the mechanism is applicable more widely.

Keywords: Emissions Taxes, Maritime, Tax Competition, Law and Economics, European Union

JEL Classification: H23, H87, K33, K34, Q54, Q56

Suggested Citation

Heine, Dirk and Gäde, Susanne and Dominioni, Goran and Martinez Romera, Beatriz and Pieters, Arne, A Regional Solution for a Transnational Problem? - A Mechanism to Unilaterally Tax Maritime Emissions While Satisfying Extraterritoriality, Tax Competition and Political Constraints (August 13, 2015). Rotterdam Institute of Law and Economics (RILE) Working Paper Series No. 2014/06. Available at SSRN: https://ssrn.com/abstract=2512747 or http://dx.doi.org/10.2139/ssrn.2512747

Dirk Heine (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics ( email )

Burgemeester Oudlaan 50
PO box 1738
Rotterdam, 3000 DR
Netherlands

University of Hamburg - Institute of Law and Economics ( email )

Johnsallee 35
Hamburg, 20148
Germany

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

World Bank, Macroeconomics, Trade and Investment Global Practice ( email )

1818 H Street, NW
Washington, DC 20433
United States

Susanne Gäde

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

Goran Dominioni

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics ( email )

Burgemeester Oudlaan 50
PO box 1738
Rotterdam, 3000 DR
Netherlands

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

University of Hamburg - Institute of Law and Economics ( email )

Johnsallee 35
Hamburg, 20148
Germany

Yale Law School ( email )

127 Wall Street
New Haven, CT 06511
United States

Beatriz Martinez Romera

University of Copenhagen - Faculty of Law ( email )

Studiestraede 6
Studiestrade 6
Copenhagen, DK-1455
Denmark

Arne Pieters

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

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